Startups – Be careful with cofounders

The article of Paul Graham titled What Startups Are Really Like, particularly item 1 - Be Careful with Cofounders made me reminisce the past startup I established about 15 years ago

I was still a young and aggressive Electrical Engineer then. I just passed my Professional Electrical Engineers boards examinations with flying colors. Through my initiative together with several other engineers from different disciplines (Civil, Mechanical, Electrical) and an accountant (not really), we formed a construction company with a registered name EMCEE with a very minimal initial capital outlay.

The primary factor in the selection of the cofounders was their knowledge and expertise in their discipline. This factor, I believed, was the primary cause of the failure of the startup.

The newly formed company, through my contacts, was able to get its first project. It was a design and construct electrical installation for a building which will be utilized as a mechanical workshop. As a startup company, we did not have much resources then, thus the founders were all utilized as installers. It was a success for the first project.

Projects then came one after the other. We did some projects at some big companies such as Coca-Cola and Pepsi-Cola Bottlers. The biggest break however was a multi-million contract for the design and construction of a 25 tonne semi-gantry crane with a span of 15 meters and a length of about 70 meters. It was then that we expanded our workers base to be able to deliver the project within schedule and budget. The project was also another success. The company assets grew considerably during this time.

It was during then that the true color of two of the cofounders were revealed. Company funds were disbursed by the General Manager and the accountant without proper authorization. It was part of the company by-laws that any disbursement above 1K needs to have the signaturea of the the General Manager and I, as the Operations Manager. This was however, circumvented by the two cofounders without my knowledge or any of the cofounders.

It was then too late when we were able to check the activities of the two cofounders, the company fund was almost empty. It was also during this time that the General Manager became hostile to me and the other cofounders. I finally decided to leave the company. The other cofounders, also left the company. As there are no more resources for the company to get projects, it only lasted for few more months before it totally got totally disbanded.

Every time I think EMCEE, I still feel the pain as it should have been a good break for us founders if only we knew the true colors of the two cofounders before signing them in.

The statement from Paul Graham article is really true.

"You haven't seen someone's true colors unless you've worked with them on a startup."

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About the Author

Ver Pangonilo
A Filipino Engineer, Registered Professional Engineer of Queensland (RPEQ) - Australia and Professional Electrical Engineer (PEE) - Philippines with extensive experience in concept select, front-end engineering, HV & LV detail design, construction and commissioning of Hazardous and Non-Hazardous Area electrical installations in water and waste water pipeline and pumping facilities, offshore platforms, hydrocarbon process plants and pipelines including related facilities. Hazardous area classification and design certification (UEENEEM015B, UEENEEM016B, UEENEEM017B).
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